There is room for Pound Sterling (GBP) to weaken further; any decline is likely part of a lower range of 1.3210/1.3310. In the longer run, strong downward momentum continues to suggest GBP weakness; the next level to monitor is May’s low of 1.3140, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Strong downward momentum continues to suggest GBP weakness

24-HOUR VIEW: "We expected GBP to 'consolidate between 1.3315 and 1.3385' yesterday. Although GBP subsequently rose and tested 1.3385, it plunged during the NY session, reaching a low of 1.3229. Today, there is room for GBP to weaken further, but any decline is likely part of a lower range of 1.3210/1.3310. GBP is unlikely to break clearly below 1.3210 or above 1.3310."

1-3 WEEKS VIEW: "Our most recent narrative was from two days ago (29 Jul, spot at 1.3350), in which we highlighted that 'price action continues to suggest GBP weakness, and the next technical target is 1.3300.' Yesterday, GBP fell and exceeded our target, as it dropped to a low of 1.3229. Strong downward momentum continues to suggest GBP weakness, and the next level to monitor is May’s low of 1.3140. On the upside, the ‘strong resistance’ level is now at 1.3355, rather than the previous level of 1.3445. A breach of the ‘strong resistance’ would indicate that the weakness has begun to stabilise."